3. Obama to Stamp Out Tax Havens!
Obama bid to stamp out Tax Havens
The world's most secretive tax havens are to be prised open after Barack Obama's new administration endorsed far-reaching legislation to crack down on them.
The decision to force "secrecy jurisdictions" to reveal the identities of the super-rich and major corporations who use them came from the US treasury secretary, Timothy Geithnerv, at a congressional hearing and will be seen as a blow to places such as Jersey, the Cayman Islands and Switzerland.
"We fully support the legislation … on offshore tax centres, and we look forward to working with you as part of the broader effort to address international tax evasion and close the tax gap," Geithner told the House ways and means committee.
His commitment was followed by supportive comments from Gordon Brown during his speech to Congress yesterday. But the prime minister will come under intense pressure to resist the move from the City and the tax havens that are UK dependencies or overseas territories. Britain has recently faced international criticism for blocking European measures to reveal details of those who deposit huge wealth in tax havens.
With an estimated $13tn (£9tn) of untaxed wealth held in offshore centres, taxing them would add $255bn of revenue to governments – more than double the global aid budget to poor countries.
Key measures in the new legislation, now likely to be in force within 12 months, include revealing the beneficiaries of secretive trusts and identifying "offshore secrecy jurisdictions" that "unreasonably restrict US tax authorities from obtaining needed information" as well as severely increasing penalties against tax evaders and closing numerous loopholes.
Senator Carl Levin, who along with Obama introduced similar legislation in recent years only for it to be thwarted by George Bush, said: "President Obama's support for the Stop Tax Haven Abuse Act, as announced by treasury secretary Geithner, is very welcome news and greatly improves the chances of an offshore tax bill becoming law this year.
It also sends a strong signal to tax havens that this administration is not going to tolerate the kind of offshore tax abuses that have been draining $100bn a year from the US treasury and that, as a result, offload the tax burden on to the backs of honest taxpayers."
The US underlined its intent last month when it demanded that the Swiss bank UBS surrender the names of 52,000 American account holders in a case that threatens to end centuries of Swiss bank secrecy.
Geithner's comments come as European leaders grow increasingly agitated at how tax havens have fostered secrecy that has contributed to the collapse of banks the world over. "We want to put a stop to tax havens," France's president, Nicolas Sarkozy, said recently. "We want results on this, with a list of tax havens and a series of consequences."
Raymond Baker, director at the Washington-based thinktank Global Financial Integrity, said: "This is a pivotal time in global finance. From the European commission's recent adoption of measures to improve co-operation between EU member states and increase transparency in tax assessment and collection to the G20's stated intent to crack down on tax havens when they meet in April, calls around the world are growing for definitive action on the problem of tax havens."
Levin: Offshore tax havens used by rich Americans in Switzerland, the Cayman Islands and other nations are targeted for shutdown by a bill to be offered in the U.S. Senate.
In legislation that expands on a bill co-sponsored last year with then-Senator Barack Obama, Senator Carl Levin will propose a broad crackdown on tax avoidance schemes estimated to deprive the U.S. government of more than $100 billion a year.
The bill comes just two days ahead of a Senate hearing with UBS executives to testify about an investigation of the Swiss banking giant.
"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Levin in a statement given to Reuters. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year.
"We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will."
Since last year, three provisions have been added to the Senate bill.
- One would classify U.S.-controlled foreign corporations as domestic for income tax purposes
- Another would close an offshore tax dividend loophole that lets people dodge payment of U.S. taxes on U.S. stock dividends, the aides said.
- The third provision would expand tax reporting requirements for passive investments.
Wealthy Americans avoid more than $100 billion a year in taxes by hiding assets offshore, according to the Senate Permanent Subcommittee on Investigations chaired by Levin.
Among other provisions, the legislation being reintroduced by Levin, a Michigan Democrat, would make it easier for federal authorities to pursue possible tax evaders by putting more onus on them to show offshore shelters are legitimate.
Swiss banks and their clients are closely watching U.S. government probes of UBS and what they could mean for Switzerland's long history of banking secrecy.